5 Best Software Stocks to Buy According to Cathie Wood

In this article we discuss the 5 best software stocks to buy according to Cathie Wood. If you want to read our detailed analysis of Wood‘s history, and hedge fund performance, go directly to the 10 Best Software Stocks to Buy According to Cathie Wood.

5. Spotify Technology S.A. (NYSE: SPOT)

Number of Hedge Fund Holders: 46    

Spotify Technology S.A. (NYSE: SPOT) is a Sweden-based company that owns software that streams audio and media. It was founded in 2006 and is ranked fifth on our list of 10 best software stocks to buy according to Cathie Wood. Spotify stock has offered investors returns exceeding 35% in the past year. ARK Investment holds more than 3.8 million shares in the company worth over $1 billion, representing more than 2.05% of their portfolio. ARK activity on Spotify stock increased by 66% in the last few months. 

On April 29, Spotify Technology S.A. (NYSE: SPOT) stock was upgraded to Buy from Hold by investment advisory Pivotal Research. The share price of the firm jumped 2% after the ratings update as Pivotal assigned the stock a price target of $340. 

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Spotify Technology S.A. (NYSE: SPOT) with 3.1 shares worth more than $852 million. 

In its Q4 2020 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks and Spotify Technology S.A. (NYSE: SPOT) was one of them. Here is what the fund said:

“At the current share price, Spotify basically only represents a fraction of the value they will be able to unlock in the growing market of audio entertainment. The key for Spotify is to change a variable cost base into a fixed cost base just like Netflix has. As the market share of the big labels, measured by the daily hours of engagement of the big labels, is declining, Spotify will be able to adjust its business model and create enormous operational leverage meaning that profitability will grow faster than expenses.

The music catalogue is not the business model. The value lies in the machine learning that drives discovery and engagement, the original content from people like Michelle Obama, Kim Kardashian, and Joe Rogan, the data analytics and distribution for artists, the direct and social relations artists can have with fans through music and videos. We believe that Spotify will be worth at least five times more in 2030.”